Public choice theory suggests:
A) regulatory agencies seek to reduce their bureaucratic structure in order to reduce the need for high taxes.
B) bureaucrats do not respond favorably to lobbyists and special interest groups.
C) that firms may exploit regulation in order to limit competition.
D) government employees seek to serve the public interest, not their private interests.

Question

Quizplus · Accepted Answer

Public choice theory suggests that firms may exploit regulation in order to limit competition. This is known as rent-seeking behavior, where firms use the regulatory process to gain economic rents, rather than to create social welfare. This behavior often involves lobbying or influencing government officials to create regulations that benefit the firm at the expense of their competitors or the public.

Public Choice Theory Suggests